Fox Ignores Debt Ceiling Brinkmanship In Fitch Downgrade Warning

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Fox News

Fox News completely ignored the role of political brinkmanship over raising the debt ceiling in prompting a credit downgrade warning, erroneously claiming that the warning was prompted by concerns over long-term debt stabilization.

On October 15, credit rating agency Fitch placed the United States on a negative rating watch, threatening to downgrade the country's debt from "AAA" status if the debt ceiling is not raised in a timely manner.

On the October 16 edition of Fox News' America's Newsroom, co-host Martha MacCallum interviewed Fox Business' Stuart Varney regarding Fitch's downgrade threat, asking why the stock market has not reacted negatively to the warning. The conversation eventually turned to the United States' long-term debt prospects, with MacCallum asking if rating agencies have become less concerned about the national debt. Varney responded by claiming that not only are rating agencies still concerned about debt, but also that Fitch's warning was primarily in response to the United States' long-term debt:

MACCALLUM : It used to be that the credit rating agencies were very concerned about the long-term financial stability of the United States of America. Is that no longer the case Stuart?

VARNEY: No, they are still concerned. That's what this warning was all about. We have failed to get our long-term debt under control.

Varney's assessment of Fitch's warning is false.

At no point in their discussion did MacCallum or Varney mention the primary reason Fitch placed the United States' credit on negative watch: brinkmanship over raising the debt ceiling. In its warning, Fitch directly cited political obstacles to raising the debt ceiling as a "high" driver of the rating watch (emphasis added):

The U.S. authorities have not raised the federal debt ceiling in a timely manner before the Treasury exhausts extraordinary measures. The U.S. Treasury Secretary has said that extraordinary measures will be exhausted by 17 October, leaving cash reserves of just USD30bn. Although Fitch continues to believe that the debt ceiling will be raised soon, the political brinkmanship and reduced financing flexibility could increase the risk of a U.S. default.

While Varney contends that debt worries were a primary driver in prompting the warning, Fitch explicitly stated that current and near term debt levels (as a percentage of the economy) are consistent with the agency's "AAA" rating. Fitch did suggest that public debt should be put on a downward trend in the medium to long term, but noted this concern was secondary to the more immediate and potentially disastrous problem of failing to raise the debt ceiling.

Republicans have held firm in their unwillingness to raise the debt ceiling without extracting political concessions, most related to defunding, delaying, or eliminating provisions in the Affordable Care Act. 

Virtually every other news outlet noted that Fitch was primarily concerned about brinkmanship and failure to raise the debt ceiling. Instead of noting this fact, Fox chose to continue its history of raising false alarms over the nation's debt load.

Posted In
Economy, Budget
Fox News Channel
Martha MacCallum, Stuart Varney
America's Newsroom
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